Diethylstilbestrol (DES) is a man-made estrogen, first approved by the Federal Drug Administration (FDA) in 1947 for use in complications during pregnancy-specifically, to prevent miscarriages. Between the years 1947 and 1971, DES was manufactured by hundreds of drug companies and popularly prescribed for millions of pregnant women. In 1971, the medical literature reported a statistically significant association between the use of DES, or of chemically similar synthetic estrogens manufactured during the same period, and the subsequent development of cancer in the users’ daughters, exposed to the drug in utero. A small percentage of the estimated one-half million or more DES daughters are presently suffering from clearcell adenocarcinoma of the vagina and uterus, heretofore rare and sometimes fatal forms of cancer. The vast majority have other abnormalities, which may be pre-cancerous. In 1971, the FDA, contraindicating DES for use by pregnant women, effectively banned it for this purpose both because of its danger’ and ineffectiveness.
Several hundred daughters, some with cancer and some with possibly pre-cancerous conditions, are plaintiffs in an estimated eighty to one hundred DES cases presently pending in the United States. Most of the major drug companies are defendants. Plaintiffs allege that defendants insufficiently tested DES and sold it without warning, when they knew or should have known it was both ineffective and unsafe for use by pregnant women. It should be noted that under present law, even a cause of action in strict liability in the area of drugs apparently sets a negligence standard for tortious behavior-that the manufacturer knew or should have known his product was dangerous. Only one of the DES cases, Barros v. E.R. Squibb & Sons, Inc., has gone to trial, resulting in a verdict for the defendant. However, the verdict was based on the jury’s failure to accept the plaintiff’s identification of the injury-producing product. Thus, this case does not indicate whether future DES defendants will be found liable under the negligence standard. If the drug companies are found liable in future cases, damages are estimated in the billions. A number of legal problems face the plaintiffs in these cases: class action certification, running of the statute of limitations in jurisdictions without a broad discovery rule, possible absence of a cause of action for fetal injury prior to viability, and absence of a cause of action if the danger of DES can be shown to have been unknowable at the time of manufacture.
However, the unique legal problem in the DES cases concerns the crucial issue of cause-in-fact. Because of the time lapse from the intake of DES to the manifestation of injury, and the further interval before recognition of DES as the probably causative agent, a majority of plaintiffs cannot identify the manufacturer of the drug ingested by their mothers. In such suits, plaintiffs have joined as many as ninety-four DES manufacturers as defendants, alleging joint and several liability. According to the existing law of joint tortfeasors, there are two possible theories which plaintiffs may utilize in order to solve the cause-in-fact problems posed by the DES cases. Under the first theory, plaintiff must prove that the defendants engaged in a concerted action. Thus, each manufacturer becomes a cause-in-fact of each plaintiff’s injury and the need to identify a particular manufacturer as defendant is obviated. Joint and several liability results. The second theory is alternative liability as exemplified by Summers v. Tice, in which all the defendants had behaved tortiously but only one had caused the plaintiff’s injury. Under this approach, joinder of all tortfeasors shifts the burden of proof on the issue of causation from plaintiffs to defendants. Since defendants in the DES cases are as unable as plaintiffs to identify a particular manufacturer as the one who marketed the drug directly responsible for plaintiff’s injury, this second theory also effectively results in joint and several liability. It should be noted that under either theory, the court must make a further determination of proximate cause: does the defendants’ duty to protect the plaintiff extend to the particular result involved? As a matter of policy, a court may refuse to hold defendants jointly liable where to do so would impose an extraordinary extension of the “original obligation” owed by defendants to the plaintiff.
Since neither concert nor alternative liability has ever been applied to a factual pattern with the complex characteristics of the DES cases, this Comment will examine the logic, policy, and practice of these theories as they relate to DES. It will suggest that joint and several liability might be found under either theory, but it will also propose and define a third theory, that of “enterprise liability,” as the best solution to the causation problems of DES.
Enterprise liability is a hybrid theory, with characteristics derived from alternative liability and concert of action, although it is based primarily on the first of these. In the process of fusion, both theories have been modified to enable plaintiffs to plead and prove their case more easily, and also to protect defendants. Under enterprise liability, the plaintiff must prove there is a high probability that her injury was caused by the tortious behavior of some one of the defendants-a modification of alternative liability. In addition, she must show that defendants concertedly adhered to a dangerous, industry wide safety standard in their manufacture of the injury-producing product. Evidence of these two elements will shift the burden of proof on causation to the defendants.
Enterprise liability would impose joint and several liability in a situation which occurs with increasing frequency in our highly industrialized society. Fungible products with delayed and dangerous effects cause injury, but the instrumentality and agent producing the specific injury are unidentifiable. Although the theory extends liability and is proposed at a time when insurers are lobbying to decrease the responsibility of manufacturers to the consumer, it is suggested as an equitable, legally and economically sound method of joint liability. The DES cases are proposed as the first instance for its application.
THE DRUG INDUSTRY
DES and a Proposed Theory of Enterprise Liability, The Fordham Law Archive of Scholarship and History, Volume 46, Issue 5, Article 4, 1978.
In order to understand the factual, legal, and policy issues of the DES cases, some understanding of the nature of the drug industry and its production of DES is required. The drug industry is one of both high profits and high returns. Between 1961 and 1971, it ranked either first or second annually among the major industries in return on both stockholders’ equity and sales. During the late 1960’s and early 1970’s, the industry’s profits rose annually by approximately 14%. This has recently dropped to 10%, which has been acknowledged by an industry spokesman to be a satisfactory level. Seventeen drug companies, a number of them defendants in DES actions, appeared on the 1976 Fortune 500 list of the largest industrial corporations in the United States, ranked by sales.40 In a 1972 report to Congress, it was emphasized that the drug industry was “practically unique” in that losses, or even low profits, are practically unheard of among large drug companies. Although the pharmaceutical manufacturers justify their profits by the extreme risk inherent in the development of new drugs, critics have recognized an inherent contradiction in the coexistence of high risks and consistently high, industrywide profits. Such risks would result in at least “occasional losses” to some firms.Parallel practices provide a basis for charges of concert in the drug industry. Parallel practices are demonstrated in a unique feature of drug companies, known as the “me-too” practice. Once a manufacturer has issued a drug, other companies may foresee a significant potential market for this product and wish to manufacture the same drug. If they are unable to do so without violating a patent and are also unable to obtain a licensing arrangement, they often spend considerable research money to develop a drug which varies only insignificantly from the original product. This can then be marketed without invading the original patent. The result is a proliferation of trade names with one basic product. Furthermore, a single defect in the original drug may be common to all similar products subsequently manufactured, regardless of brand name.
This parallel pattern is evident in the manufacture of DES. Since DES was unpatented by its inventor and potentially useful for the treatment of a variety of estrogen problems in women, in 1941 twelve drug companies submitted a joint clinical file to the FDA pursuant to their request for New Drug Applications (N.D.A.’s) for DES. These twelve companies also agreed on common chemical standards for the drug to be manufactured by each of them, and on uniform labeling and product literature. The purposes for which the drug was approved in 1941 did not include its subsequent use for the prevention of miscarriages. Commencing in 1947 and during a short period of time thereafter, new individual N.D.A.’s for the use of DES by pregnant women were submitted by these companies and others, and approved by the FDA. Subsequently, other, generically differentiated drugs with the same danger as DES if used during pregnancy were developed and manufactured by still other drug companies to take advantage of the growing market. Although the parties to the DES suits hotly dispute the significance of the 1941 joint file and agreement, especially since DES was not being submitted to the FDA for use by pregnant women at that time, plaintiffs have cited these events in charging defendants with concert of action.
Other special features of the drug industry deserve attention both because they aid in understanding the general background of the DES cases and because they also create suspicions of concerted action among industry members. Two such features are monopoly and pricing patterns. Despite the several hundred manufacturers of DES and related drugs, it has been estimated that Eli Lilly & Co. and five or six other manufacturers accounted for 90% of the market for this drug.s This situation is not unique to DES; the pharmaceutical industry has been investigated by the Senate for its monopolistic practices and has been the subject of major antitrust suits.ss The drug industry consists of a series of product markets, each defined by a group of competitive, or substitutable, drugs. High barriers to market entry favor the large companies which can spend the most on promotion, and those which have a patent or are first to develop and advertise a drug. Although many firms may participate in a certain product market, a small number of the same companies tend to dominate each market. It has been reported that in a group of twenty such markets, the proportion of output accounted for by the leading five firms ranged from 56 percent to 98 percent.
Drugs produced by the dominant companies within a given market are generally not price competitive with each other, and frequently cost many times more than the competing brands of lesser known firms with a far smaller share of the market. This is probably due to the lack of buyer participation in the creation of demand for a given product. The doctor, not the consumer, determines when a particular type of drug is required, and then specifies in his prescription the brand to be purchased. s9 Since the primary medical criteria for drug use are safety and efficacy rather than price, 60 and since the major source of drug information is the manufacturers themselves rather than objective sources, 61 industry members spend enormous amounts of money in order to influence the doctor’s choice of a drug. The result is wide variations in the prices of the same drug produced by different manufacturers, and very little relationship between cost and price. The fact that the dominant drug in a product market may also be the one with the highest price raises questions of concert. The defensive reaction of many members of the drug industry when asked to explain this phenomenon to government investigators does nothing to alleviate this suspicion. 64 Although price is not a major factor in a doctor’s choice of a drug, one would expect it to carry some weight where all other factors are equal. Nevertheless, those manufacturers who make a cheaper equivalent product do not generally alert doctors to this fact. It seems entirely possible that this indicates an exchange of favors by major members of the drug industry, allowing each to continue to dominate certain product markets without interference.
Another indication of cooperation within the drug industry is its wellfinanced trade association, the Pharmaceutical Manufacturer’s Association (PMA). It has been a strong lobbyist with legislative groups, the American Medical Association, and the FDA. An organization which appears to have been a predecessor of the PMA, The American Drug Manufacturers Association, was instrumental in arranging the 1941 joint clinical submission for DES to the FDA.
CONCERT OF ACTION AND ALTERNATIVE LIABILITY
Concert of action is one of the two theories under which plaintiffs may be able to obtain joint and several liability in the DES suits. The typical concert of action case is that of the illegal drag race in which a bystander is injured by one of the participants. Assume A, B, and C participate in such a race and P, a bystander, is injured by A’s car. P may sue A or B or C or any combination thereof, and each of the three is jointly and severally liable for P’s injury. P need only allege that each defendant he has joined helped plan and facilitate the race, that the participation of each was tortious, and that his injury resulted from the race. A plan or unspoken agreement may be inferred from the parallel actions of A, B, and C. Although the legal theory of concert seems to have evolved in order to deter hazardous group behavior rather than because the actual injury-producing party could not be identified, he theory must deal with the problem of causation. Where A, according to commonsense notions of causation, was the only cause-in-fact of P’s injury, some justification must be found for also holding B and C as causative agents. It has been suggested that “the act of one is the act of all,’ that is, that B and C are vicariously liable for A’s act. Another view theorizes that the causative tortious event was the car race itself in which all three parties participated, rather than A’s collision with P. Both explanations of cause-in-fact seem to be based on a fiction. Vicarious liability is necessarily a fiction. Under the second view, whenever there are more than two participants in the concerted action, the “but for” definition of cause-infact is fictional as to the liability of some of the participants for the concerted action. For example, if C had not participated in the race at all, A and B might still have raced and injured P. Thus it is not true that, “but for” C’s action, P would not have been hurt. However, this second justification for finding that each party to a concerted action is a cause-in-fact of the result seems clearly defensible when based on Prosser’s preferred definition of cause-in-fact as “a material element and a substantial factor” in plaintiff’s injury. Under this rationale, the fiction is eliminated since each of the three participants contributed materially to the occurrence of the race, although it might have taken place even if one were absent.
An obvious analogy exists between the drag race and the manufacture of DES. Arguably, the drug industry pattern, where the first manufacturers of a product achieve dominance, could have motivated the decision of the original manufacturers to pool their data and rush into production without adequate testing. If they knew, or should have known, that this created the risk of an unreasonably dangerous product, their original cooperative behavior was tortious. It can be argued that the later FDA approval of DES for use in pregnancy depended on this earlier joint submission of clinical data. Parallel, imitative practices among many of the manufacturers of DES, as well as actual agreement in some cases, resulted in uniform cautions, lists of contraindications and dosage schedules, and reliance on the same dubious scientific articles in promotional materials. The “me-too” practice in the drug industry increased the manufacture of DES and the consequent wide publicity and use of this drug. Thus each individual plaintiff’s injuries resulted from the tortious, concerted activities of all DES manufacturers, just as P’s injury resulted from the drag race in which A, B, and C participated. Since each DES manufacturer is a “substantial factor” causing each plaintiff’s injuries, he is jointly and severally liable regardless of whether he manufactured the particular drug which the plaintiff’s mother ingested.
Questions arise in the application of concert of action to the DES cases. One is whether concert, generally used in cases where individual tortfeasors participate in car races or assaults, can be extended beyond a simple tort situation to one as complex as cooperation among modern industrial organizations. Given sufficient evidence of cooperation, concert should be as applicable to corporate activities as to individual activity. Courts have shown a willingness to apply it in such situations.
Hall v. E.I. Du Pont De Nernours & Co. is the major case involving corporate defendants where concert has been applied. One of the two cases consolidated in Halls’ involved twelve separate accidents in which thirteen children were injured by dynamite blasting caps. The evidence of individual manufacture was destroyed by the explosions. Plaintiffs joined the six major domestic manufacturers of blasting caps and the industry’s trade association, alleging that all the defendants knew that blasting caps were dangerous and agreed not to place warnings on them. The court held that defendants were not entitled to a dismissal for plaintiffs’ failure to state a claim since plaintiffs were pleading concert of action. Thus, plaintiffs were not required to allege either a conspiracy to commit intentional harm or a joint venture. Hall is parallel to the DES cases not only because the defendants were corporate entities comprising virtually an entire industry, but also because concert was used not to deter manufacturers of blasting caps but exclusively to cure plaintiff’s inability to identify the particular defendant whose product caused the injury. The court’s awareness of its unusual use of concert was demonstrated by its additional requirement that the burden of proof of causation be shifted to defendants. Ordinarily plaintiff’s showing that each defendant joined in the concerted action would be sufficient to show that each was a cause and since proof of causation would be satisfied, there would be no need to shift this burden to defendants. The court’s purpose in allowing the use of the concert theory becomes even clearer in light of the other case90 consolidated in Hall. In that case, plaintiffs were able to identify the manufacturers of the injury-producing caps. Thus, the court refused to allow a plea of concert and the joinder as defendants of those manufacturers whose products had not injured each of the plaintiffs.
A group of California cases are noteworthy for extending liability to corporate defendants who, although not previously considered causes-in-fact of injury, were found liable because of the degree of their cooperation with the traditionally liable party. In each of these cases, while the court did not explicitly refer to concert, the language of the opinion indicated that the corporation’s liability was based on a theory of concert of action. In Connor v. Great Western Savings & Loan Association, liability was extended to a bank-lender where the loan recipient negligently designed and constructed homes. A joint venture was not found because the bank and the builder did not share profits and losses. However, the bank had a right to approve building plans, received first rights on construction loans to home buyers, and knew that the developer was dangerously underfinanced. It thus had a duty to the buyers although it was not in privity of contract with them. The bank was found liable because “Great Western became much more than a lender
… It became an active participant in a home construction enterprise. In Hanberry v. Hearst Corp., the endorser of a defective product was held liable in negligence, although it had nothing to do with the product’s manufacture. Good Housekeeping, by giving the product its seal of approval, had “voluntarily involved itself into the marketing process, having in effect loaned its reputation to promote and induce the sale of a given product .
… In the third of these cases, Kasel v. Remington Arms Co., a trademark licensor was held strictly liable in tort for a defective shotgun shell actually manufactured by a Mexican affiliate. Although Remington was not the majority owner of the Mexican company’s stock, Remington had a right of inspection and quality control of the product, its trademark and name were used on the package, and it received royalty payments and a percentage of net sales. The court found controlling “defendant’s participatory connection, for his personal profit or other benefit, with the injury-producing product and with the enterprise that created consumer demand for and reliance upon the product…
Another problem in the application of concert to the DES cases is evidentiary: what is sufficient evidence of concert absent explicit agreement? While discovery in the DES cases is not complete, the principal evidence of explicit agreement thus far is that of the twelve original manufacturers who jointly submitted clinical data to the FDA in 1941. With respect to subsequent activity and manufacturers other than these twelve, evidence consists of parallel activity and the cooperative nature of the industry. While concert does not require conspiracy or even an inferred agreement, but only an unspoken tacit understanding, it is easier to infer such an understanding between two cars racing side-by-side at ninety miles an hour than among a number of drug manufacturers behaving in similar fashion. Nevertheless, courts should be willing to allow such an inference where the parallel behavior is knowing, part of a generally cooperative pattern in the industry, and beneficial to the participants, when accompanied by minimal evidence of explicit agreement. Relevant here are antitrust cases based on section I of the Sherman Act, which requires a contract, combination . . . or conspiracy. The Supreme Court has held that in a section 1 case consciously parallel behavior without express agreement is sufficient evidence for a jury determination of conspiracy, although such a determination is not compelled. Generally, lower courts have required some additional evidence of interdependence, beyond that of mere parallelism, to find conspiracy. Such evidence in the DES cases would be the original agreement. The antitrust cases have been cited as precedent in tort cases finding concert on the basis of parallel activity among business enterprises, including competitors, even where there was little additional evidence of contact among the defendants.
Another possible approach to insufficient evidence of an explicit agreement is suggested in dicta by the court in Hall. There it was indicated that parallel behavior among competitors might be viewed as a lesser form of concert sufficient to shift the burden of proof on the issue of causation to defendants.10 9 Under one of these approaches, it is arguable that the minimal evidence of agreement in DES.manufacturing history plus parallel activity is sufficient to have the DES cases submitted to a jury.
Another problem is that, unlike the DES cases, most instances of concert involve few defendants and the causative action occurs at the same time and place. However, these characteristics do not appear necessary to the legal theory of concert and have probably occurred coincidentally, because of the simple nature of the tortious activities in most such cases. Nor have they invariably appeared. An assault suit in which concert was found involved the participation of seventy-five to eighty men. In Hall, the activities of defendants took place over a decade, on a nationwide basis.
A final problem in the application of concert to the DES cases is that, where plaintiffs join fewer defendants than the total number of DES manufacturers, they are subject to the charge of arbitrary and inequitable selection of responsible parties. Plaintiffs may prefer to join fewer than all DES manufacturers, because of cost or general impracticability. In most cases they will be forced to join fewer than all manufacturers. Some manufacturers may not be subject to the court’s jurisdiction; some may have gone out of business; and the plaintiffs will be forced to omit others because they cannot ascertain who all the DES manufacturers were. There are three responses to the charge of inequitable selection of defendants. First, the defendants themselves can implead further manufacturers. Second, under the theory of concert each participant is equally liable for the total damages and joinder of all possible tortfeasors is not therefore required. Third, if, as appears likely, only six or seven DES manufacturers dominated the market, joinder of only these manufacturers is a selection of the most responsible parties. Not only is one of them most likely to be the manufacturer of the specific drug ingested, but the major manufacturers as a group were the pace setters and decision makers in the manufacture of the drug.
It seems clear that concert could be pleaded in the DES cases in order to arrive at joint and several liability. The most serious problem for plaintiffs, and one which might lead to a directed verdict for defendants, is the possibly inadequate evidence of agreement, or “tacit understanding,” among defendants.
“Double fault and alternative liability” is a completely different legal theory which, like concert of action, imposes joint and several liability. This theory has been applied to cases where all defendants are at fault in that all behaved tortiously, but only one unidentifiable defendant caused plaintiff’s injury. Since the defendants acted independently, there is no concert of action. In order to solve the problem of causation, once all tortfeasors are joined the courts have shifted the burden of proof of cause-in-fact to defendants. Where defendants cannot meet this burden and absolve themselves, joint and several liability results. This theory is appropriate to the DES cases for two reasons. Unlike concert, where the chief purpose of joint liability is deterrence, this theory evolved in order to relieve a plaintiff of the burden of proving causation where it was inequitable to require him to do so. Secondly, the DES plaintiff is relieved of the evidentiary burden required by concert of showing agreement or “tacit understanding.”
Summers v. Tice demonstrates the classic fact pattern of cases relying on a theory of alternative liability. Here, plaintiff’s two hunting companions fired their guns simultaneously and negligently in his direction. Only one of them could have fired the shot which injured him, but it was impossible for plaintiff to ascertain which of them had done so. Although concert had been found in similar cases cited as precedent, the court felt a holding of concert was “straining that concept.” , it justified its holding of joint and several liability, unless either or both defendants could absolve themselves, on policy grounds: where defendants are all wrongdoers and their negligence has caused a situation in which the innocent plaintiff cannot identify the cause of his injury, fairness dictates that he should not be required to do so or go remediless. In addition, the court pointed out, defendants often have better access to evidence of causation than do plaintiffs. Therefore, the wrongdoers should be left to work out between themselves any apportionment [of damages]. The Restatement (Second) of Torts has codified the Summers holding in section 433B , offering the same policy reason of fairness.
Analyzed in terms of cause-in-fact, Summers and the cases following it 1 create a clearly fictional presumption. If all wrongdoers are joined as defendants, one of them must have been the cause-in-fact of injury. By shifting the burden of proof to them, with the resulting possibility that each will be found liable, the presumption has been created that each is the cause-infact, although this is obviously impossible under any definition of causation. Since there is an equal probability of causation by each defendant, even with the smallest possible number of defendants the probability for each is no greater than 50%. However, the presumption can be justified because, since all possible tortfeasors are joined, there is a 100% probability of causation collectively. Since policy reasons favor finding liability, 30 the usual requirement in civil cases of a “preponderance of evidence” for each defendant, here interpreted to mean a mathematical probability, has been lifted in favor of certainty as to all defendants.
Many of the elements of the Summers fact pattern are present in the DES cases. Defendants’ manufacture of dangerous pills for the unwary public can be compared to the hunters shooting in the direction of their companion. In each situation, all defendants are tortfeasors owing a duty of care to the injured plaintiff. In both the DES cases and Summers, the tortious nature of each of the defendants’ conduct was identical and created the same type of risk. Neither the plaintiff in Summers hit by a bullet nor the DES daughter who developed cancer is at fault for being unable to identify the one who caused his injury. In both cases the defendants created the conditions which caused the plaintiffs inability to identify-by shooting simultaneously in Summers and by manufacturing a single drug under a variety of trade names in the DES cases.
Although the Summers line of cases is the clearest example, arguably two other groups of cases also exemplify alternative liability and should also be compared to the DES cases. In these two groups of cases the burden of going forward with the evidence or of proof as to causation is also shifted to defendants because the plaintiff cannot identify the cause of his injury. In one .group, the defendants’ independent tortious actions have combined to cause indivisible injury to the plaintiff. The multiple car collision cases are examples of this group. Each of the defendants in such a collision has theoretically caused some part of the damage, but the contribution of each is difficult or impossible to apportion. Joint liability is generally found, and under the Restatement and the law of some jurisdictions, the burden of proof is shifted to defendants to limit their liability. The cases justify this joint liability by saying that since all defendants contributed to the plaintiff’s injury, he should not be required to go remediless unless he can show the degree to which each defendant contributed and identify the specific injury each caused. Arguably, many of these cases are examples of alternative liability in another guise. For example, one car in a multiple collision might have caused no injury to the plaintiff at all, but if each defendant argued this and the plaintiff were required to prove each one had caused some injury, then all defendants could escape liability. Since this would be inequitable, the courts shift the burden of proof just as they do in Summers.
The second group of cases are instances of joint liability in a res ipsa loquitur context. Generally, res ipsa loquitur is used to infer negligence where a single defendant is in exclusive control of the instrumentality causing harm. However, even where there are multiple, independent defendants and only one can be assumed to have caused the plaintiff’s injury but he cannot be identified, some courts have used res ipsa loquitur to infer negligence and causation. Other courts have shifted the burden of going forward with the evidence and even of proof as to negligence and causation to all the defendants, with a finding of joint liability where the defendants cannot meet this burden. In such cases there is obviously no proof of exclusive control.
These cases go much further than Summers, or than would a DES case, in that not all the defendants are tortfeasors.
One such case is Ybarra v. Spangard, where the plaintiff awoke after an appendectomy with an inexplicable paralysis of his shoulder. Knowing neither the person nor the instrumentality which caused his injury, he sued six persons, doctors and nurses, each of whom had an independent responsibility for his welfare at some point during the period in which he was unconscious. Presumably only one defendant was negligent. While the theory of concert of action has been used, with some plausibility, to explain the court’s shifting to the defendants of the burden of going forward with the evidence for causation as well as negligence, the court’s basic reasoning was that of alternative liability, buttressed by the fairness argument later used in Summers. Commentators have also justified the result in Ybarra on the basis of the special responsibility of medical personnel for their patient’s safety. While only one was actively negligent, all the defendants owed the plaintiff a duty “to see that no unnecessary harm came to him. This justification is equally applicable to a finding of a joint liability in the DES cases, since manufacturers also owe a special duty of care to members of the consuming public. The consumer of DES who swallowed a pill relied on the manufacturers’ skills in research and their assurances of safety, just as the patient who submits to an operation relies on the special skills and assurances of hospital personnel.
In a recent case, the Supreme Court of New Jersey made just such an argument in extending the Ybarra holding to a manufacturer and a distributor. In Anderson v. Somberg, the plaintiff was injured when a surgical instrument broke off in his spinal canal during an operation. He sued the doctor and hospital for negligence, the instrument’s distributor for breach of warranty, and its manufacturer in strict liability. While one of these parties must have been the cause of injury, the evidence did not conclusively point to the culpable one. The court held that something “akin” to res ipsa loquitur applied for all causes of action because of the “special responsibility” of the manufacturer and distributor, as vell as of the other defendants, to the patient. It also held that in such cases, where all possible defendants were before the court, not only did the burden of proof shift to the defendants but the jury must be instructed to find at least one defendant liable. It reached this unprecedented holding because of the strong policy reasons favoring the plaintiff’s recovery. Equally strong reasons exist in the DES cases.
Although the DES cases are directly comparable to Summers and to the related groups of cases discussed above, the application of alternative liability to the DES cases does require a modification of some of the elements present in Summers and most similar cases. Consequently, those elements which will be varied must be examined to determine whether a finding of joint and several liability in the DES cases will still be logically and legally coherent.
The cause of action in Summers was negligence, while in DES, as in most product liability cases, there are alternative causes of action. Strict liability and warranty have dispensed with the element of fault and are based on the presence of three factors-causation, defect, and injury. It is arguable that alternative liability, which effectively eliminates causation in the sense that it cannot be ascribed to any one party, provides an insufficient basis for joint liability under either of these causes of action. However, the Restatement explicitly extends its application of Summers to all tortious conduct1 60 and cases such as Anderson have applied a form of alternative liability to strict liability and warranty causes of action. A court considering this extension would probably base its decision on the policy reasons for finding liability. In the DES cases, this issue is moot, since the law appears to set a negligence standard under all causes of action when the defective product is a drug.
In Summers, all tortfeasors were before the court. In some of the DES cases an attempt has been made to accomplish this, but others include only the major manufacturers of DES. Since it is probably impossible to bring suit against all the tortfeasors, it should be permissible to join a relatively small number of manufacturers, if those joined accounted for the great majority of DES sales, and still apply alternative liability.
There are several arguments against allowing joinder of fewer than all tortfeasors. First, if even one tortfeasor is absent, and it was he who actually caused the plaintiff’s injury, then only the “innocent” defendants may be held liable. In any case, however, in which alternative liability is applied there exists the probability of one or more “innocent” defendants being held liable. This is allowable on policy grounds: no tortfeasor is actually innocent and it is preferable for him to bear the loss which may have resulted from his wrongdoing rather than for a completely innocent plaintiff to do so. A second argument is that Summers created a presumption of causation which varied the standard of preponderance of the evidence. Although the probability of causation by any single defendant was 50% or less, this was balanced by the certainty that one of the joined defendants was the cause. Since this variation of the standard of proof depends on joinder of all defendants, arguably joining fewer than all destroys the presumption. In answer, it may be pointed out that the Restatement acknowledges that future cases may arise in which some modification of the joinder requirement may be necessary. In Hall, which applied alternative liability in addition to concert, such a case did arise. The court required only that plaintiffs “show by a preponderance of the evidence” that their injuries were caused by some one of the defendants. Therefore, although Canadian-made blasting caps were sold in the United States and no foreign manufacturers were joined in the suit, joinder of the manufacturers responsible for the majority of domestic blasting cap sales satisfied the plaintiffs’ burden of proof. It is suggested that, while the Summers presumption should be modifiable, the court in Hall created too great a modification by requiring only that plaintiffs show by a preponderance of the evidence that one of the defendants was the cause. Where joinder of all tortfeasors is difficult or practically impossible, and the equities favor the imposition of liability, the proper standard for joinder should be “clear and convincing evidence” that some one of the defendants caused the plaintiff’s injury. Precisely what proportion of the total market would be required in a DES case would have to be determined by a court, but the market share accounted for by defendants should be substantially greater than 50%. Such a standard is not only logical, but realistic, since it is practically impossible for all possible causes of any event to be before the court and ultimately any court must be satisfied with the most probable causative agents.
The Summers approach arguably requires that plaintiffs not be at fault for the impossibility of identification, since otherwise it would be unjust to place the burden of identifying the actual causative agent on the defendants. Although it seems apparent that a DES plaintiff, unborn when her mother took DES, is no more at fault for her inability to identify than was the wounded plaintiff in Summers, defendants in one DES case have argued that she is at fault. The reasons given were that the mother’s choice of drug, doctor, and pharmacist, the mother’s records and her memory, were all more within the control of plaintiff daughters than of defendants. This argument seems fallacious for several reasons. Plaintiffs, as yet unborn, were certainly not in control of the activities of their mothers. Furthermore, ascribing fault to the women who took DES is a misrepresentation of the actual process by which drugs are prescribed, a process which involves little choice by consumers. It is arguable that plaintiffs’ mothers are no more blameworthy for failing to notice or remember the exact pill they took than the plaintiff in Summers for failing to notice who shot him.
In balancing the respective fault of plaintiff and defendants, a more important consideration, and one emphasized by the Restatement, is whether it was the nature of the defendants’ conduct and the resulting harm which caused the plaintiff’s inability to identify. The manufacture under a variety of trade names of a drug with delayed effects created a situation in which it was unlikely that any identification could be made. Thus, the DES cases are more compelling than Summers in this respect, since in Summers the conduct which created impossibility of identification was the simultaneity of defendants’ shooting, not in itself tortious. With respect to DES, it is arguable that the very tortiousness of defendants’ conduct in failing to discover or warn of the dangers of DES was the major reason why all parties failed to keep better records or remember the drug prescribed, since they were unaware of any reason to do so.
The Summers court emphasized in dicta that defendants often are better able to identify the cause of injury than the plaintiff. This reasoning is a concession to the usual justification given for allocating the burden of proof, and is not based on the realities. Just as the hunters in Summers had no better access to such information than did the wounded plaintiff, so DES manufacturers have no better access than do daughters with cancer. In most such cases, causation is inexplicable by all parties and the allocation of the burden of proof depends on other factors, such as fairness or the “disfavoring” certain defenses.
In Summers, the events took place at one location simultaneously. In the DES cases, defendants’ conduct took place over a wide geographic area during a period of years. The only reason to require unity of time and place in an alternative liability case is to allow the defendants, who bear the burden of proof, to see what happened and thus be able to identify the causative agent. However, since generally none of the parties in cases of alternative causation can identify the causative agent, this is an insufficient reason to require such characteristics. The Restatement, which only mentions simultaneity as a characteristic of the cases, recognized that passage of time in a particular situation might necessitate a modification of this requirement. The cases have done so. Furthermore, to require unity of time and place would be to limit the Summers holding to a simple, nonindustrial world.
In Summers there were only two defendants; in Ybarra there were six, and in Hall seven. In the DES cases as many as ninety-four defendants have been joined, 179 although this Comment suggests that far fewer would be sufficient for alternative liability to apply. The DES cases present the problem of whether Summers can be applied to cases with a large number of defendants. The greater the number, the less likely it is that any particular one of the defendants was responsible for any particular injury. In Summers there was a 50% chance that either one of the two parties was responsible; in the DES cases with ninety-four defendants, assuming an equal probability as to each defendant, there is slightly more than a 1% chance of each defendant’s responsibility. Although joint liability may seem inequitable under these circumstances, it need not be. Since there is not an equal possibility of causation for each defendant, and the possibility of causation can best be estimated by market share, damages should be apportioned according to market share.’ s0 If this were done, the amount of damages each defendant would pay in the total number of DES cases would be approximately the same whether identification were made or not, and the number of defendants would be irrelevant. For example, if X Manufacturer sold one-fifth of all the DES prescribed for pregnancy and identification could be made in all cases, X would be the sole defendant in approximately one-fifth of all cases and liable for all the damages in those cases. Under alternative liability, X would be joined in all cases in which identification could not be made, but liable for only one-fifth of the total damages in these cases. X would pay the same amount either way. Although the correlation is not, in practice, perfect, it is close enough so that defendants’ objections on the ground of fairness lose their value.
One question remains: how much and what type of evidence is required to exculpate any single defendant from liability in the DES cases? This was not specified in Summers or the cases following it, but it is possible that in Summers a 51% probability of liability for one defendant might have exculpated the other. Such a result is arguably inequitable in the context of the Summers case, and clearly so in the DES cases, which differ from Summers in that the evidence on market share is statistical. Although it has been urged that in the DES cases plaintiff’s burden is satisfied by joining those manufacturers responsible for a high percentage of sales, there is nothing to stop defendants from joining as many additional defendants as they are able, who would then be proportionately liable for damages. A defendant should not be able to exculpate itself if it had a 2% market share and another defendant had 75% of the market. Carried to its logical conclusion, such exculpation could result in one manufacturer, if it had a sufficient market share, being liable for all damages in all DES cases. It is therefore suggested that only evidence unrelated to market share be exculpatory. For example, if a plaintiff’s mother took red pills in Milwaukee in 1955, all defendants whose products were not sold in Milwaukee in that year or were any other color than red could remove themselves from the action.
Enterprise liability as proposed here combines the better features of concert and alternative liability into one coherent theory. It can result in the joint and several liability of all the industry members that manufactured an identically defective product. The theory would be available to plaintiffs who cannot or might not be able to identify the actual causative agent of their injury. In all other instances it would be unavailable because traditional tort law would be sufficient to fix liability. The elements of enterprise liability are:
- Plaintiff is not at fault for his inability to identify the causative agent and such liability is due to the nature of the defendants’ conduct.
- A generically similar defective product was manufactured by all the defendants.
- Plaintiff’s injury was caused by this product defect.
- The defendants owed a duty to the class of which plaintiff was a member.
- There is clear and convincing evidence that plaintiff’s injury was caused by the product of some one of the defendants. For example, the joined defendants accounted for a high percentage of such defective products on the market at the time of plaintiff’s injury.
- There existed an insufficient, industrywide standard of safety as to the manufacture of this product.
- All defendants were tortfeasors satisfying the requirements of whichever cause of action is proposed: negligence, warranty, or strict liability.
Once plaintiff proves these elements, the burden of proof as to causation shifts to defendants, each of which can exonerate itself only by showing, according to the standards of proof already proposed, that its product could not have been the one which injured this particular plaintiff. Defendants, of course, may also attempt to disprove any and all elements of plaintiff’s case. Damages will be apportioned among those defendants found liable in proportion to their market shares.
Enterprise liability has been developed specifically to solve the problem of causation encountered in the DES cases and cases analogous to them-the plaintiff’s inability to identify the manufacturer that sold the defective product that resulted in her injury. It is suggested that policy requires, as between an innocent plaintiff and a group of tortfeasors, that the plaintiff’s loss be placed on the tortfeasors. Traditional tort law, however, may prove inadequate to solve the problem of causation in DES cases. Plaintiffs might not be able to meet the concerted action requirement of a “tacit understanding” among the manufacturers. The elements of alternative liability, particularly those requiring only a few tortfeasors, all of which are before the court, are sufficiently distorted that it virtually becomes a different theory. It is therefore suggested that a new theory be designed to fit the facts in the DES cases by combining elements of alternative liability and concert. Enterprise liability is derived from alternative liability because its basic premise is that some one of the defendants probably caused, in the traditional sense, the plaintiff’s injury. Therefore, any defendant who can show that his product could not have caused the injury, even though he also adhered to inadequate industry standards, may exculpate himself. Such exculpation would not be allowed under the concert approach. Enterprise and alternative liability are also alike because the primary purpose of both theories is to cure plaintiff’s inability to identify the injurious product, and both accomplish this purpose by shifting the burden of proof of causation to defendants.
Unlike the theory of alternative liability, however, enterprise liability emphasizes certain activities of the industry as a whole-adherence to an inadequate safety standard and manufacture of an identically defective product. It is submitted that, in an ethical and a legal sense, this group behavior resulted in the plaintiffs’ injuries. This focus on the joint activities of industry members is analogous to the “agreement” requirement in concert cases, and also reflects the purpose of those cases-to deter similar behavior in the future. Unlike concert, however, the parallel behavior of defendants, absent any understanding among them, is sufficient to prove this element.
The justification for concluding that each defendant is a cause-in-fact of the plaintiff’s injury under enterprise liability is also derived from a combination of the explanations of causation in concert and alternative liability. The primary model is alternative liability, as it was modified earlier in this Comment. Accordingly, cause-in-fact results from the fictional presumption that each defendant is the cause because, jointly, there is a high probability-clear and convincing evidence-that the product manufactured by some one of the defendants, all of which behaved tortiously, caused the specific plaintiff’s injury. The standard of clear and convincing evidence is met by joining those manufacturers that accounted for a high percentage of the defective products on the market, approximately 75% to 80%. This standard of evidence is less demanding than the traditional Summers presumption which requires all tortfeasors to be joined. The Summers theory is also diluted because, by joining so many defendants, the probability that any one was the cause-in-fact is lessened. On the other hand, plaintiff must prove an additional element in enterprise liability, not found in Summers, one that is derived from the concerted activities of the defendants: an insufficient industrywide safety standard. Industry custom has generally been used by courts as evidence to determine whether an industry member has met the proper standard of care, although such evidence has not been conclusive. In Hall, however, the court suggested in dicta that adherence to an inadequate industry standard might be a lesser form of concert because it indicated joint control of risk, the basis for a finding of concert. Analyzed in terms of causation, the industrywide standard becomes itself the cause of plaintiff’s injury, just as defendants joint plan is the cause of injury in the traditional concert of action plea. Each defendant’s adherence perpetuates this standard, which results in the manufacture of the particular, unidentifiable injury-producing product. Therefore, each industry member has contributed to plaintiff’s injury. Proof of this standard alone would be too weak a form of concert to justify a finding that each industry member was a substantial cause of plaintiff’s injury and therefore jointly and severally liable. However, the addition of this explanation of causation to the weakened presumption derived from Summers should be sufficient to shift the burden of proof on the issue of causation to the defendants under enterprise liability.
Both Hall and Ybarra provide precedent for enterprise liability. Hall’s major contribution is that, in a case similar on its facts to the DES cases, it proposed and provided a rationale for a theory of industrywide liability where the industry members were “the most strategically placed participants in a risk-creating process,” although only one of them could have “directly” caused each plaintiff’s injury. Hall’s major defect is that, while it provided policy reasons for such an imposition of liability, it neither recognized nor analyzed the problems of cause-in-fact implicit in the court’s theory, nor in its decision. Therefore, although the court in Hall proposed several working models for enterprise liability, each combining elements of concert and alternative liability, these combinations are not logically defensible when analyzed in terms of cause-in-fact. For example, the court apparently decided that the plaintiff’s allegations of an explicit agreement among defendants to join in a tortious activity were sufficient to state a claim because they constituted a “classic” plea of concerted action. However, citing Summers and section 433B of the Restatement, the court then required that plaintiffs also show by a preponderance of the evidence… that the caps involved in the accidents were the products of the named defendantmanufacturers, whereupon plaintiffs would be relieved of the burden of proving causation and this burden would shift to defendants.20 However, if plaintiffs’ allegations of concert were to be believed, defendants’ participation in the concerted plan was sufficient to arrive at causation, and there was no necessity for any additional proof.
Ybarra is noteworthy because, like Hall, in a situation where plaintiff could not identify the injury-producing tortfeasor, the court seemed to justify its finding of causation on the grounds of alternative liability and concert. Although Summers is generally credited with having created alternative liability, Ybarra, which was decided earlier, is clearly a variant of that theory in a res ipsa loquitur context. However, the finding of causation in Ybarra can also be viewed as based on concert. The court itself briefly referred to the “highly integrated system of activities – in modern hospitals, and to the fact that “doctors and nurses in attendance [could but did not] voluntarily [choose] to disclose the identity of the negligent person …. This latter fact has been elaborated by commentators into the theory of a conspiracy of silence among the hospital personnel. If, however, the concerted action in Ykarra was the joint silence of all defendants, this took place after the injury had occurred and could not have been its cause. Thus, Ybarra’s theory of concert does not explain causation, nor did the court in Ybarra attempt to relate concert to its predominant holding of alternative liability. The theory of enterprise liability proposed in this Comment builds on the foundation laid by both these cases, but attempts to combine the theories of concert and alternative liability in a more satisfactory fashion than did either case.
Much of the strength and justice of enterprise liability rests in the suggestion that damages be apportioned among defendants in proportion to their market shares. Since enterprise liability results in joint and several liability, each defendant is liable for the whole amount of the damages. Because contribution exists in the majority of jurisdictions, damages in fact will generally be divided among the defendants. Unfortunately, only a minority of jurisdictions recognizes a comparative form of contribution where the amount of damages each defendant pays is based on the degree to which each defendant caused plaintiff’s injury, although such contribution is more equitable where the degree of responsibility among defendants is as certainably unequal. It is suggested that comparative contribution should exist in enterprise liability, for the reasons discussed earlier.
The primary reason advanced thus far for the plaintiff’s recovery in the DES cases has been an equitable one-that as between the innocent plaintiff and the tortfeasors, the tortfeasors should bear the cost of injury. While this is the basic policy behind enterprise liability, it is a simplistic approach to a complex issue, There are a number of arguments favoring the imposition of enterprise liability in DES, which are in line with twentieth-century thought in tort law The proposed theory of enterprise liability holds liable defendants that, according to traditional notions, are not really at fault. In addition, not only are the defendants not in privity with the plaintiff in the usual sense, but all defendants except the one that actually sold the injury-producing product are not even in the vertical chain of distribution. Therefore, privity is absent even in the most extended sense. The absence of fault and privity, however, are not without precedent. Modern theories of tort law that remove the necessity for either provide theoretical support for enterprise liability, and justifications for its existence.
The doctrine of respondeat superior, which Hall suggested is related to enterprise liability holds a master liable for the torts of his servant although the master is not in privity with the injured third party and is innocent of any tortious behavior himself. Respondeat superior is not a recent form of liability, and, although numerous ingenious explanations of it have been advanced over the years, the modern justification for vicarious liability is a rule of policy, a deliberate allocation of risk. The losses caused by the torts of the employees, which as a practical matter are sure to occur in the conduct of the employer’s enterprise, are placed upon that enterprise itself, as a required cost of doing business. The employer, who derives a profit from the enterprise, is the party best able to absorb and distribute its foreseeable costs to the public. He is also in the best position to take preventive measures.
In the past twenty years the advent of strict liability has largely abolished the requirements for privity and fault in products liability. The manufacturer has been the focal point for liability, although he has “exercised all possible care” and “entered into [no] contractual relation” with the user. The policy reasons advanced for strict liability of the seller are identical with those for respondeat superior.
Enterprise liability can be justified on the same policy grounds as respondeat superior and strict liability. Where an entire industry, engaged in a predictably dangerous enterprise and following similar safety practices, places an identically defective product in the stream of commerce, the industry rather than the individual manufacturer should be the focal point for liability because it can best allocate risks, distribute costs, and take preventive measures. Under these circumstances, privity and the conventional notion of fault are dispensable. Therefore, like respondeat superior and strict liability, enterprise liability shifts liability from the one in privity to the parties best able to satisfy these policy goals. While the first two shift liability vertically, from employee to employer and from retailer to wholesaler to manufacturer, enterprise liability shifts it horizontally, from one manufacturer to a group of manufacturers. This horizontal shift is a unique feature of enterprise liability, because the majority of the defendants are consequently not in the chain of distribution of the actual injury-producing product. However, this feature can be considered merely an extension of the theories of respondeat superior and strict liability-the next step in the removal of the requirements of fault and privity.
Enterprise liability is also similar to strict liability in that scientific and industrial advances necessitate both theories. Justice Traynor, in his landmark concurring opinion in Escola v. Coca Cola Bottling Co., stated that the strict requirements of negligence could no longer be met because the complexities of modern manufacture, as opposed to the comparative simplicity of earlier handicraft, were “inaccessible” to the consumer. He urged the adoption of strict liability because the manufacturer’s obligation to the consumer must keep pace with the changing relationship between them. … Technological advances and current market conditions now allow an entire industry to manufacture a complex fungible product; modern scientific research can link contact with this product to harmful effects after a significant lapse of time. Since these advances now make identification of the injury-producing product inaccessible to the consumer, the manufacturer’s obligation to the consumer can only be met by some new form of liability.
Application of Enterprise Liability to the DES Cases
The DES cases are ideal for this first application of enterprise liability because the drug industry rather than the individual manufacturer is so clearly the proper focal point for liability. It was the industry, and not individual manufacturers, which did not meet the normal expectations of society in manufacturing DES. Through imitative drug research, joint submission of clinical data, and parallel, possibly imitative, marketing practices, the industry adhered to an industrywide inadequate safety standard. Therefore the industry as a whole is responsible for consumer reliance on the safety of DES, its widespread use, and the resulting injuries.
The party best able to predict injury and pay claims is also the industry itself, rather than particular manufacturers. Drugs rank high as a cause of consumer injuries, both in frequency and severity. Consequently, catastrophic drug injuries are predictable events, although exactly which injuries will result is not. Industrywide statistics on drug injury have been compiled and presumably are used by insurance companies in order to determine product liability insurance rates. Additionally, large drug manufacturers presently cooperate with each other and the federal government to jointly set industrywide loss control standards. Even greater centralization of statistical data seems possible in the near future, as does the initiation of centralized payment of claims. In view of dramatically rising product liability insurance premiums and drug manufacturers’ difficulty in obtaining such insurance, several pharmaceutical concerns have established “captive” insurance companies. In other words, they have become self-insurers. It has recently been suggested that the entire industry establish a captive insurance company, which would mean a sharing of risks industrywide. West Germany, which by law requires product liability insurance for drug companies, sets the example of another method of centralizing data and risk-a pool set up by insurance companies to underwrite pharmaceutical products liability. Either alternative would be more likely to provide coverage for drug companies, be more economic, and probably be more efficient than the present system of insurance in the United States. The implementation of such innovations in insurance would be hastened by the adoption of enterprise liability.
Where generically similar drugs are manufactured industrywide, prevention of injury can best be undertaken by the entire industry rather than by the individual manufacturer. Under the present system, unification already exists through the FDA which gathers and interprets safety data supplied to it by the drug industry before and after N.D.A.’s are issued. The FDA’s testing requirements before approval of N.D.A.’s are much more comprehensive than they were at the time DES was first manufactured. However, the FDA post-marketing reporting system for adverse reactions has been severely criticized. This reporting system is a major FDA function because serious side effects, which frequently have a low incidence or take years to develop, often do not manifest themselves until a drug has been widely marketed. It has been suggested that, in view of the stringent FDA requirements on drug manufacturers to warn of known or suspected dangers, it is to the manufacturers’ advantage not to improve this reporting system. The imposition of enterprise liability would provide incentive to the industry for such improvement, since there would be instances in which it would be liable as a whole. For example, in addition to urging better mechanisms for reporting adverse reactions to the manufacturers than now exist, the industry could establish its own system to collect and collate such reports. This might well be more efficient than waiting for the overworked FDA to coordinate the data it receives.
Economic criteria have already been discussed as significant in the choice of best risk bearer. These are: choice of that enterprise which can best absorb the loss and distribute it most widely, and choice of that enterprise which can distribute the loss to those who benefited from the injury-producing enterprise. A choice of the entire drug industry meets these criteria as well as or better than the individual manufacturer, or the injured plaintiff if no liability were to be found.
The drug industry can best absorb and distribute the loss. Although its profits have decreased in recent years, the industry is a financially healthy one. It is either protected by insurance, albeit at rising costs, or capable of self-insuring. The small manufacturers, which are most susceptible to rising liability and insurance costs, may even be protected by enterprise liability, which is aimed at the largest producers with the major share of the market-the giant drug companies. Claiming that money would be diverted from research and development of new drugs, the drug industry would obviously resist an increase in its liability costs through the imposition of enterprise liability. In fact, the drug industry has been criticized for expending its research money on unimportant variants of existing drugs rather than on basic research, which raises the question of how much pharmaceutical research is for the public’s benefit and how much is simply for profit regardless of benefit. Since drug manufacturers do not spend a large percentage of their total sales on research and spend a great deal on promotion, their concern with the effect of additional costs on research is suspect. This claim is also fallacious because the industry can absorb the cost of higher liability through higher prices; and since demand is relatively inelastic, the industry can retain its present profit margins. To the extent that liability might reduce profit, the industry would be forced to reevaluate and reallocate its presently wasteful research efforts to the public’s benefit. As for distribution, the drug industry can obviously distribute the tort loss more widely than individual manufacturers or the plaintiffs. It does so primarily by raising prices.
Analyzed narrowly, the criterion that the ultimate cost of the loss be borne by those who have benefited from the risk-producing enterprise is difficult to meet. Since DES was probably ineffective in preventing miscarriages, neither the women who took it nor their daughters benefited from the drug. Therefore, placing the tort loss on the daughters does not satisfy this goal. Even had DES been effective, its tort cost cannot now be distributed to pregnant women through a retroactive raise in price, since DES is no longer on the market for use in pregnancy. Therefore, placing the loss on the individual manufacturer will not result in distributing the cost to these women. However, distribution through pricing is, in the broadest sense, a distribution of cost to the industry’s beneficiaries-the drug-buying public. Enterprise liability thus does satisfy the criterion of distributing cost to the enterprise’s beneficiaries. Attaching liability to the entire industry also distributes it to those few who did actually benefit from the manufacture of DES-investors and employees.
The DES cases present a gap in tort law. Liability as to multiple defendants, only one of which directly caused injury, cannot be found under present law unless either the theory of concert or of alternative liability is stretched beyond its current limits. Although this Comment has attempted to develop both these concepts logically to a point where they can be applied to the DES cases, application of either theory is makeshift. Therefore enterprise liability, a third theory involving aspects of both, is advocated for adoption by the courts in the DES cases.
The DES cases are only the tip of an iceberg. As technology and science advance, there will be more products liability and analogous cases in which the injured party will be unable to identify the specific cause of his injury. Society faces a choice in these cases: it can either leave the injury where it falls as the price of modern technology;, provide sporadic compensation through the application of current tort theories; or adopt a new legal theory which enables it to compensate uniformly. It is suggested that, where such injuries are the result of an entire industry’s activity, the industry rather than the injured individual should bear the loss. Enterprise liability accomplishes this. An enlightened tort law should be able to adjust itself to the equities and the economic realities that the DES cases present.
Enterprise liability suggests more than it proposes. Most of the policy arguments advanced in favor of industrywide liability, where the entire industry has concertedly manufactured an identical, defective product, are equally valid even where an injured plaintiff can identify the cause of his injury. Such liability is the logical extension of the more limited liability proposed in this Comment. Understandably, enterprise liability has not been urged in such a situation because existing tort law, which is still firmly grounded in fault and conventional notions of causation, can reach an equitable result. An even greater extension than enterprise liability would be no-fault insurance for all product injuries, subsidized by manufacturers and available to consumers solely on proof of causation of injury by a product. Such solutions are in the province of the legislatures; it is not the function of the courts to propose such broad extensions of liability. It is the courts’ business to weigh the equities between the parties before it and where these permit, to compensate tort victims. Enterprise liability permits them to do so in DES and similar cases.
Naomi Sheiner, 1978
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